Brazil: The New Brazilian Anti-Corruption Law

The enactment of the Law no. 12,846/2013, better known as the
"Anti-corruption Law", introduces administrative and
civil liability on legal entities for illicit acts practiced
against local and foreign Public Administration.

The new Anti-corruption Law may be enforced against corporate
entities that engage in corruption of public officials and
fraudulent practices in connection with public tenders and
government contracts. The law also prohibits companies from
frustrating or defrauding the public tender process in any way,
gaining an undue advantage or benefit from fraudulent modifications
or manipulations of government contracts, or hindering the
government's investigation or auditing activities.

Another important device introduced by the law is the strict
liability of legal entities in the civil and administrative levels,
for acts of corruption committed in their interest or benefit.
Therefore, the company can be held liable regardless of the
liability of the individuals involved, without the need to prove
that the management or directors had a corrupt intent.

Liability of the legal entity shall not exclude the personal
liability of its directors, officers, or any individual who has
directly contributed to the illegal act.

With respect to the administrative sanctions, legal entities may
be fined up to 20% of the entity's gross revenues in the year
prior to that in which the administrative proceeding is initiated,
or even up to R$ 60 million in circumstances in which it is not
possible to calculate gross revenues. Other administrative sanction
includes publication of the condemnatory decision on media of wide
circulation.

Regarding judicial sanctions, they include loss of assets,
rights and valuables, suspension or partial interdiction of
company's activities, and prohibition to receive incentives,
grants, donations or financing from public entities and financial
institutions owned or controlled by the government, for a period of
1 to 5 years. The law also provides for mechanisms to avoid that
new legal entities incorporated by the shareholders of previously
punished entities, contract with the Public Administration.

Controlling, controlled, affiliates or companies in consortium
shall be jointly liable for the practice of acts prohibited by the
new law, being such joint liability limited to the obligation to
pay fines and full restitution of the damage caused.

Another important provision is the possibility of the Public
Administration to enter into leniency agreements with companies
that collaborate effectively with the investigations. Entering into
a leniency agreement will result in a reduction or exemption of
certain sanctions. The purpose of this provision is to encourage
voluntary self-reporting by companies.

It is worth noting that the new Anti-corruption Law encourages
the effective application of codes of ethic/conduct and the
existence of mechanisms and internal procedures of integrity,
auditing and incentives to report irregularities, in other words,
the implementation of compliance programs, since the existence of
these mechanisms will be taken into account by the government when
applying the administrative sanctions. It is expected, therefore,
that companies with compliance programs will be benefited.

The new law was published on the official gazette on August 2,
2013 and will become effective 180 days as of this date.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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